It Starts with a Square

Financial Moves for Life’s Inflection Points

BY Regan Hewitt

Inflection points is a term used widely to describe historical or technological events, such as the Industrial Revolution or the creation of the internet — events that changed human existence in some important way. You have personal inflection points too, and when they occur, you will need to make the right financial moves.

Here are three of the most important of these life inflection points, along with suggestions on dealing with them:

Marriage 

When you get married, you and your spouse will need to discuss a variety of financial issues. What assets and liabilities do you each bring to the marriage? Should you combine your finances or continue with separate accounts? Is one of you a “saver” while the other is a “spender”? Do you share similar investment philosophies, or is one of you much more aggressive than the other? You do not necessarily have to agree on everything, but you should at least try to gain enough knowledge so you can avoid unpleasant surprises, such as hidden debts, and find enough common ground so your household can advance toward your common financial goals.

Checklist Items 

  • Develop a monthly budget and stick to it. 
  • Decide who will manage day-to-day finances.

New child 

When you welcome a new child into your family, you will need to make sure you have adequate life insurance. You will also want to review the beneficiary designations on any existing insurance policies, as well as on your IRA and 401(k). If you can afford it, you may want to start contributing to a college fund, possibly using a 529 savings plan, which can provide you with tax advantages.

Checklist Items  

  •  Review and update beneficiaries of your IRAs, 401(k) plans, life insurance, annuities and other accounts.

Retirement 

By the time you retire, you will have hopefully been investing in your IRA and 401(k) or other retirement plans for several decades. Once you do retire, you will need to determine how much you can afford to withdraw each year from your various retirement accounts. Your withdrawal rate will depend on your age, your asset level and your retirement lifestyle. You will also want to consider other issues: Are you prepared to deal with health care costs? Even with Medicare, these costs may be higher than they were when you were working. 

How about your estate plans? Are they up to date? Have you protected your family from the possibility of your estate going through the time-consuming, expensive and public process of probate? You may need to work with your financial, tax and legal advisors to develop an effective estate strategy.

Checklist Items 

  • Establish investment strategies that can help you achieve your retirement goals. 

By making smart decisions and seeking the advice of a qualified financial advisor following your inflection points, you can ease the transitions in your life — wherever it takes you. 

Jeffery Elsworthy 

Edward Jones®  Financial Advisor 

155 North Main Street, Suite 103 

901-861-1350 

Edward Jones® , its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.

March/April 2021 Tour Collierville Magazine